Tuesday, 26 April 2016

Worst Revenue For IBM In 14 Years, Shares Slide

New York: American multinational technology and consulting corporation, International Business Machines (IBM) has reported its worst quarterly revenue in 14 years as results from newer businesses including cloud and mobile computing failed to offset declines in its traditional businesses, sending shares down nearly five percent in extended trading.
The revenue of the world’s largest technology services company fell by 4.6 percent to $18.68 billion in the first quarter, but has beaten analysts’ average estimate of $18.29 billion. It was the 16th straight quarter of revenue decline for IBM.
IBM has been moving toward areas such as cloud-based services, security software and data analytics, while trimming its traditional hardware business by exiting low-margin businesses, under the guidance of Chief Executive Ginni Rometty. However, revenue in the company’s newer businesses is failing to make up for declines in its traditional segments.
Bernstein analyst Toni Sacconaghi, in a research note before results, wrote that the falloff in IBM’s traditional businesses was dwarfing the company’s ability to capture new revenue.
Revenue from “strategic imperatives,” which includes cloud and mobile computing, data analytics, social and security software, rose about 14 percent in the first quarter. But revenue from the services and hardware segments fell 4.3 percent and 21.8 percent, respectively, in the quarter. Excluding items, IBM earned $2.35 per share, beating the average analyst estimate of $2.09.
The company received a $1 billion refund in the quarter that lowered its effective tax rate to a negative 95.1 percent compared with 19.5 percent last year.IBM maintained its full-year adjusted earnings guidance of at least $13.50 per share. Analysts on average were expecting $13.55, according to Thomson Reuters I/B/E/S.
Up to Monday's close, IBM’s shares had risen 10.83 percent this year, compared with a 2.46 percent gain in the S&P 500 index.


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